NAME TUSHAR SOLANKI ROLL NO -312630 DIVISION - F

ITC LTD
INTRODUCTION
ITC WAS FORMED ON 24 AUGUST 1910 UNDER THE NAME IMPERIAL TOBACCO COMPANY OF INDIA LIMITED. LATER THE NAME WAS CHANGED TO INDIA TOBACCO COMPANY LIMITED IN 1970 AND THEN TO I.T.C. LIMITED IN 1974. FINALLY, THE COMPANY CHANGED ITS NAME TO 'ITC LIMITED' ON SEPTEMBER 2001.

 The earlier decades of the company's activities centered around the tobacco industry. Since 1964 conclusive
epidemiological evidence of the deadly effects of tobacco consumption has led to a sharp decline in official support for producers and manufacturers of tobacco, in spite of its large contribution to the agricultural, fiscal, manufacturing and exporting sectors of the economy. Viewing the changes in the business dynamics in the tobacco industry, the company started looking to other venues for earning revenue. In 1970s, it started to enter non-tobacco businesses and in the same period it started reducing the foreign equity holding in the company to 40%.

 In 1975, the company entered Hotel business with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola'. In 1979, ITC entered the Paperboard business by promoting ITC Bhadrachalam Paperboards Limited,which today has become the market leader in India. In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepali and British joint venture. Since inception, its shares have been held by ITC, British American Tobacco and various independent shareholders in Nepal. In 2002, Surya Tobacco became a subsidiary of ITC Limited and its name was changed to Surya Nepal Private Limited.

 In 2002, ITC entered Safety Matches business with acquisition of WIMCO Limited. ITC now markets safety matches brands like iKno, Mangaldeep and Aim. ITC's entered Agarbattis (incense sticks) business in 2003. ITC's popular agarbattis brands include Spriha and Mangaldeep.

Following are the Bussiness of the ITC

Cigarettes Foods Lifestyle retailing

Personal care
Education and stationary Safety matches Agricultural business

Information technology.

Problem Faced By the ITC

Although ITC has a reputation in the market, it does actually have some competitors. The major competitors for the ITC welcomgroup is TAJ GROUP OF HOTEL and OBEROI GROUP OF HOTELS which is also a powerful hotel industry in the current market. The service provided by both the hotels is very similar to the ITC welcomgroup hotels which are a threat for losing the customers of ITC.

IT IS IMPORTANT TO NOTE THAT THE COMPETITORS ARE NOT ONLY THE PROBLEM FOR ITC. THERE ARE SOME GENERAL PROBLEMS WHICH AFFECTS BOTH THE MARKET AS WELL AS THE SPECIFIC HOTELS OR INDUSTRIES WHICH ARE AS FOLLOWS,

THE FIRST AND THE MAJOR THREAT FOR THE ENTIRE MARKET IS THE BAD ECONOMY WHICH HAVE THE BOTH DIRECT AND INDIRECT AFFECT ON ALL KINDS OF INDUSTRIES WHICH ARE ALL IN THE MARKET. THE BAD ECONOMY IS WHAT THE CURRENT MARKET IS SUFFERING FROM WHERE SOME OF THE MAJOR INDUSTRIAL SECTORS ARE FACING A HUGE PROBLEM IN MAKING A NORMAL PROFIT.

THE SECOND FACT IS THE NEW COMERS IN THE MARKET. ACCORDING TO ITOPC (INDIAN TOUR OPERATORS PROMOTION COUNCIL), THERE ARE UPCOMING HOTELS IN THE NEAR FUTURE SUCH AS,

Uppal Group plans to develop seven luxury hotels by 2010 Marriott to add 24 hotel by 2011
Panoramic Universal to launch new hotels in India Accorr Group has plans to set up 200 hotels in India.

 BCG Matrix OF ITC

Stars: ITC Ltd has a very strong market position in the sectors such as Hotels, Paperboard/packaging and agricultural business. They are very famous for Hotels and Agri business.ITC is very strong in these positions as these sectors are considered as stars in BCG matrix which means these sectors generates a huge amount of profit because of the market shares.

Cash cows: ITC Ltds FMCG-Cigarettes are now in the position of Cash Cows in the market as they produce a stable cash flow which makes a good growth rate in the market shares. As there is a good profit, it is a hope that this sector may move to the position of Stars or Question marks in the near future.

Dogs: ITC InfoTech are now the Dogs in the BCG matrix as they have very low market share and doesnt produce lot sum amount of cash which indicates the weakest sector of

 Question marks: ITC Ltds FMCG sectors such as automotive companies, furniture companies, financial companies, tobacco companies, food companies are in the stage of question mark in the BCG matrix which means these sectors growing rapidly fast and consumes a large sum of cash because of low market shares. But there is a chance that these sectors may become stars.

SWOT ANALYSIS -

STRENGTH The strength of the organization is nothing but its brand and the powerful management. ITC Ltd brands are very popular in India. Their beauty products such as Fiama Di Wills and Vivel are more popular in the market. The ITC Welcomgroup hotels have a powerful position in the market as well. This is the positive side for the ITC Ltd.

WEAKNESS

The weakness of the organization is their unrelated diversification. They have major hotel sectors and as well as Agri sectors and so on. As there is no connection between the different sectors, there may arise a problem in the future of handling the business in the smooth way as the fortune of the market is always unpredictable. This is the negative side for the

The opportunities for the organizations such as rural market and E-choupal are a big boon to the organization. Investing in the rural areas helps the development of rural markets and the Government lays a very less tax on the rural markets which helps the ITC to save their save their expenses on tax. This one of the biggest advantage and the positive side for the organization

THREATS -

The Threats to the ITC Ltd is that the increasing level of tax in Cigarettes which lead to loss the huge amount of cash on tax. The other threat is that the health hazard which the public is very well aware off. So the ITC Cigarettes industry which is doing very well in the present market may face some serious problems in the future market.

PORTERS FIVE FORCES MODEL

Buyers Power

Consumer faces low buying power because of fragmented and have little influence on product price. Comparing the buyer power retailers it is very high since they are needed to negotiate the price with their competitors.

SUPPLIER POWER

ITC Consumer product faces few quantity of supplier power simply due to the cost they effected when switching supplier. Suppliers are doing high volume of business with these companies are also positive value to their customers.

THREATS OF NEW ENTRANCES

The Amount Of Capital required to enter in certain house hold consumer products needs more, so the threat of new entries may results fairly low.

THREATS OF SUBSTITUTE

Within the business sector, brand name proceeds to get success with building a competitive advantage, but even though the pricing power of the products can be eroded

DEGREE OF RIVALRY -

It does not price anything for a consumer to buy one brand of shampoo instead of another, preparing the industry quite competitive. Consumer in this class enjoys variable choices.

RECCOMENDATION

ITC is recommended to make a strategy which will create the multiple driver of growth that will make substantial and ever growing contribution to its stake holder and nation. And it can be done by investing in the creation of world class brand, supported by the extensive R&D shaped at ITC life science and technology center and by leveraging all its enterprise strength the company will continue to offer competitive and superior value proposition to its customers. ITC world class brand will ensure that larger value is created, captured and retained in the country for national development and growth.